EIOPA warns €523bn private credit tests insurer valuations

That makes valuation methodology central to the supervisory issue. EIOPA’s valuation guidance requires firms to use the method that gives the most reliable estimate of the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s-length transaction. When future cash flows can be estimated reliably, firms may use discounted cash flow projections to value the asset.

The same valuation problem becomes more acute under stress. EIOPA’s 2026 stress-testing methodology specifies that assets may need to be recalculated by changing only the basic risk-free interest-rate term structure while keeping spreads unchanged, which may require mark-to-model valuation. Pre-stress mark-to-model values should be consistent with quoted market prices for relevant assets in active markets.

Where the exposure sits

EIOPA said EEA insurers’ private credit exposure totalled €523bn at year-end 2025, equal to 5.0% of assets, up from €514bn a year earlier. It said the level did not yet raise supervisory concern at an aggregate level, but required monitoring of potentially concentrated exposures in individual insurers.

Mortgages and loans accounted for around two-thirds of private credit exposures, followed by unlisted or untraded corporate bonds and collateralised securities subject to credit risk.

Liquidity and concentration

Private assets remain attractive to long-term investors because they typically offer an illiquidity premium and diversification benefits, but those same features make independent pricing, cash flow assumptions and concentration monitoring more important than for traded assets.

Capital backdrop

The warning comes while EEA insurer solvency remains strong. The median solvency capital requirement (SCR) ratio for life insurers reached 247.0% in 2025, up from 229.7% in the previous year, according to EIOPA’s June 2026 Financial Stability Report.

Composite undertakings and non-life undertakings remained broadly stable, with median SCR ratios of 219.0% and 213.7%, respectively.

Strong aggregate solvency reduces the immediate systemic signal from private credit, but it does not remove the valuation issue. EIOPA’s emphasis is on whether individual undertakings have concentrated exposures, reliable models and sufficient monitoring of private credit risks.

Sources: eiopa.europa.eu · eiopa.europa.eu